JOLTS: US Jobs Openings Mark Record High at 6.2-M
US job openings jumped to a record high in June, outpacing hiring, the latest signalling that companies are having trouble finding qualified workers.
JOLTS, the monthly Job Openings and Labor Turnover Survey released by the US Labor Department Tuesday also underscored labor market strength may encourage the Fed to continue tightening monetary policy despite benign inflation and concerns about consumer spending.
“Companies are running out of workers to hire to do the job or even train to do the work, and this is a ticking time bomb for economic growth,” said an economist in New York. “Today’s JOLTS data bring a September meeting balance sheet unwind announcement a little closer to reality.”
JOLTS, is one of the job market metrics on Fed Chairwoman Janet Yellen’s “dashboard”.
Economists expect the US central bank will announce a plan to start reducing its $4.2-T portfolio of Treasury bonds and mortgage-backed securities at its next policy meeting in September.
Tame inflation and worries about consumer spending amid tepid wage growth and faltering motor vehicle sales, however, suggest the Fed will delay raising interest rates again until December. It has increased borrowing costs 2X this year.
Job openings, a measure of labor demand, increased by 461,000 to a seasonally adjusted 6.2-M. That was the highest level since the data series started in December 2000 and pushed the job openings rate up 2-tenths of a percentage point to a near one-year high of 4.0 percent.
The monthly increase in job openings was the largest since July 2015. The surge in job openings was broad-based.
The ratio of job openings to unemployment hit a 16-year high. Hiring was little changed at 5.4-M in June, leaving the hiring rate steady at 3.7%.
The gap between job openings and hiring points to a skills mismatch, which was also corroborated by a separate report Tuesday from the National Federation of Independent Business.
The NFIB survey showed job openings at a 16-year high in July. Small businesses cited a lack of skills as the main reason for the vacancies. Others also blamed “unreasonable” wage expectations, attitude, appearance as well as drug addiction for disqualification of job seekers.
Economists are optimistic that tightening labor market conditions will spur faster wage growth. Annual wage growth has struggled to break above 2.5%, contributing to inflation persistently running below the Fed’s 2% target.
Layoffs rose 28,000 to 1.7-M in June, lifting the layoffs rate 1-tenth of a percentage point to 1.2 percent.
Layoff rates are historically low. But the recent increase may be worth watching.